FCC Critics Attack Net Neutrality Order, Title II Broadband
Critics of the FCC’s net neutrality order cited many reasons for believing it’s legally vulnerable, though none made a clear prediction on how the litigation would turn out. Speaking at a Phoenix Center teleforum, lawyers who helped file briefs against the order said the commission erred in reclassifying broadband as a telecom service under Title II of the Communications Act, failed to adequately explain its change in light of recent court precedent, ignored evidence it would harm investment, impermissibly set a “zero rate” for broadband traffic exchanges with edge providers, created an impermissibly vague Internet conduct standard and violated procedural requirements.
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Kellogg Huber attorney Scott Angstreich said the FCC misread the statute in reclassifying broadband Internet access service (BIAS) as a Title II telecom service instead of a less-regulated Title I information service. Noting cable/telco petitioner arguments, he said the commission essentially had ignored the definition of an information service as “the offering of a capability for generating, acquiring, storing, transforming, processing, retrieving, utilizing, or making available information via telecommunications.” Internet access squarely fit under that definition, he said, saying Section 230 of the Communications Act provided further backing, as did various court and even FCC precedents. “They’re claiming the whole thing is a telecom service,” despite all the computer processing involved in BIAS, he said, unlike in the Supreme Court’s 2005 Brand X ruling, which deferred to the commission’s finding as reasonable that cable modem service was an integrated information service that also had a telecom service component.
The broadband Internet "gazelle" isn't a telecom "elephant," suggested David Balto, who runs his own firm. "What the FCC is doing is trying to make a gazelle into an elephant by putting a sign on it and saying it’s an elephant,” he said. The commission ignored the engineering of how the Internet works, and by establishing a net neutrality rule against paid prioritization, it was discouraging innovation and making services such as telemedicine more difficult, he said. The FCC also assumed consumers have very little choice of broadband providers and that the latter will act as “gatekeepers,” but that wasn't substantiated by the record, he said.
The FCC had even less justification for imposing Title II on mobile broadband, Angstreich said. Not only does mobile service arguably require even more computer processing that fits under the information service definition, he said, but the commission deviated from congressional intent under Section 332 -- which distinguishes between commercial mobile services and private mobile services -- throwing out prior readings of the statute “in a belt and suspenders kind of way” and establishing a “band new functional equivalent test.” He said the FCC basically reasoned that because lots of people use mobile broadband, it’s functionally equivalent to commercial mobile services that interconnect with the public switched telephone network, when it's actually other telecom carriers that generally do that interconnection. “We challenge all that,” he said.
Wilkinson Barker attorney Russ Hanser said the FCC didn't adequately examine whether Title II reclassification would harm broadband providers that had invested billions of dollars on the assumption they would be regulated more lightly under Title I. Those investments constitute “reliance interests” that the Supreme Court has said agencies must consider before changing policies. The commission “brushed aside” much evidence industry had submitted that the new regulation would be harmful, he said.
But Angstreich said it was “difficult to gauge” how receptive the courts would be, starting with the U.S. Court of Appeals for the D.C. Circuit, which is reviewing the case. He said some of the recent Supreme Court precedent on agency decision-making has not been litigated enough to have a good sense how the case will play out in the D.C. Circuit.
Phoenix Center Chief Economist George Ford explained his group’s contention that the FCC had erred in effectively establishing a zero rate for traffic exchanges between broadband providers and edge providers, which is one side of a two-sided market (the other being between broadband providers and retail customers). Instead of being considered telecom carriers, edge providers seemingly were being treated by the commission as customers of the broadband providers, but the agency had failed to justify the zero rate for broadband "termination" of edge traffic. “What’s the standard?” he said. “It’s a dumb decision.”
The speakers said the commission’s general Internet conduct standard was too vague. “You can’t read it and figure out what’s prohibited,” Angstreich said. “There’s no way of knowing how they’ll come out.” They also said the FCC failed to give broadband providers and others adequate notice of its intent to reclassify BIAS as Title II, though Hanser suggested the courts would probably rule on the merits of the case, as a simple remand on procedural grounds would leave all the substantive arguments to be relitigated. Finally, Angstreich and Hanser said arguments that the FCC order violated First Amendment speech rights could be helpful because some D.C. Circuit judges were interested in free-speech arguments.